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| US copper prices |
Goldman Sachs’ Long Copper Recommendation Before Unexpected Tariff Announcement
Goldman Sachs advised hedge fund clients to go long US copper prices just a day before President Trump’s tariff decision triggered a historic price crash. The bank recommended buying short-dated call options expecting a 50% tariff on copper. However, the actual tariff excluded the main copper forms, causing prices on Comex to plunge 22% within hours. This misjudgment surprised the entire copper market and led to significant losses for trading desks and hedge funds alike.
Market Reaction and Broader Impact on Copper Trading
The tariff decision resulted in the largest single-day price drop in US copper contract history, doubling the previous record since 1988. Other major banks, including Citigroup, were also caught off guard. The unexpected exemption in the tariff announcement undermined market expectations for rising copper prices. Consequently, options recommended by Goldman lost over 90% of their value rapidly. This event highlights the volatility and sensitivity of copper prices to geopolitical trade decisions.
Analysts’ Diverging Views and Future Copper Market Outlook
While Goldman’s sales team pushed a bullish copper trade, its research analysts had cautioned that “minerals diplomacy” might limit tariff impacts. The research team even suggested taking profits on prior trades anticipating tariff-driven price increases. Moving forward, market participants must carefully monitor policy signals and potential exemptions, which remain crucial for copper price forecasts and trading strategies.
ScrapInsight Commentary
Goldman Sachs’ erroneous copper tariff prediction underscores the volatility in metal markets amid geopolitical uncertainties. The historic price plunge highlights risks of policy surprises on commodity valuations. Future copper price trajectories depend heavily on evolving trade negotiations and tariff implementations globally.
